Property

Scotland’s Hospitality Property Market: Key Sales & Trends

February 13, 2025

This article contains sponsored content in association with Drysdale and Company.

As we move into February 2025, we reflect on the key milestones and trends that shaped the commercial property market in 2024 and explore what lies ahead for the industry.

Notable Sales

Knockendarroch Hotel, Pitlochry

Acquired by Inverlochy Castle Management International in a multi-million-pound deal, this 18-bedroom hotel underscores demand for premium assets.

Meldrum House Hotel, Aberdeenshire

We acted on behalf of Apex Hotels in acquiring this 52-bedroom hotel in April 2024. After 31 years, the owners were delighted with this off-market sale.

The Victoria Hotel

We brokered the sale of two 21-bedroom hotels:
• The Victoria Hotel, Kirkcaldy
• The Hillpark Hotel, Rosyth
Both were purchased by experienced hotel operators, showcasing strong market activity.

The Station Hotel, Larbert

This prominent hotel at Larbert Train Station, featuring a popular bar, lounge, and function room, was sold to a local businessman in December 2024.

Old Churches House, Dunblane

An independent hotel successfully sold to developers for residential conversion, highlighting interest in hotel-to-residential transformations.

The White Stag, Strathyre

This roadside inn on a key tourist route sold quickly to an independent operator, demonstrating the ongoing demand for hospitality businesses in high-traffic areas.

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Industry Trends & Key Developments

Market Resilience in 2024

Scotland’s hospitality sector rebounded strongly post-COVID. In May 2024, the hotel room occupancy rate in Scotland reached 89.02%, up from 73.62% in May 2023, signaling strong market growth.

Rising Costs & Economic Pressures

Rising payroll costs impacted the industry. The 6.7% rise in the National Living Wage and increased National Insurance contributions added financial pressure, but the sector remained resilient.

Regulatory Changes & Impact

The introduction of Short-Term Let Licensing in Edinburgh reduced self-catering options, increasing hotel demand. Edinburgh’s ADR in September 2024 rose to £183.38, a 7.4% increase from 2023.

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Tourist Tax Update

Edinburgh City Council confirmed a 5% tourist tax to be implemented by the next Fringe Festival, expected to generate £50 million annually for sustainable tourism initiatives.

Regional Insights & Performance

Tourism continues to drive Scotland’s hotel market, with September 2024 occupancy at 85.3%. Average daily rates (ADR) and revenue per available room (RevPAR) saw notable increases:
• Glasgow ADR: £106.99
• Edinburgh ADR: £183.38

Key investment areas include the west coast, A9 corridor, and NC500, while Edinburgh remains a top UK destination for hotel investment.

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Challenges & Considerations

Despite strong performance, staffing shortages and economic challenges remain. Businesses must adapt to maintain stability and growth in the evolving market.